New report compares liner, container delivery reliability

Tuesday, July 17, 2012

The portal-based ocean transportation technology provider INTTRA and liner shipping analyst SeaIntel have released their first report comparing ocean carrier schedule reliability against actual container delivery.
The report, available at www.seaintel.com, is part of a larger analysis that marries SeaIntel’s schedule reliability database with a host of aggregated information compiled by INTTRA from its 800,000 individual container status messages per day.
The two companies announced in early June they were partnering to expand industry metrics on reliability.
"We’re both dedicated to get new information that’s more granular and more actionable,” said SeaIntel Chief Executive Officer Lars Jensen. “Having the ability to integrate with INTTRA takes it 10 steps down the line and makes it more actionable.”
One of the more interesting aspects of the joint research is the measured gap between liner schedule reliability and container delivery. The report found that, globally, 81 percent of sailings arrived on time, but only 64 percent of containers were delivered on time. That gap suggests it's more than just large liner carriers who are responsible for shipment delays, with transshipment, feeder, and inland transit problems to blame for about half the cases where container delivery is delayed.
“This tells us that in June 53 percent of the late containers were late due to vessels being late, whilst 47 percent were late due to other reasons,” the report said. “Container and vessel deliveries track each other – again indicating that improvements in actual delivery appear driven by improvements in vessel operations.”
The problem is less severe on the major east-west trades, with the gap 8 to 10 percent on the trades from Asia to Europe and Asia to North America. But, the gap from Europe to Australia is a whopping 52 percent, with liner on-time rates at 88 percent and timely container delivery at 36 percent, suggesting problems lie largely outside the control of liner carriers.
Jensen and INTTRA CEO Ken Bloom said in a call with American Shipper Monday that one of the goals of the analysis is to show that improving reliability doesn’t come at the expense of profitability.
“The industry is shifting from seeing on-time delivery as a win-lose proposition, to a definite win-win,” Bloom said. “Delivering on time means carriers have fewer exceptions to manage. They’re seeing that the industry can finally tackle this problem and both sides benefit.”
Jensen said what has enabled the industry to improve (schedule reliability has been steadily improving the past year since SeaIntel began measuring it) is that carriers are distinctly focused on processes.
“A number of carriers have been moving to be more process-oriented,” said Jensen, a veteran of Maersk Line. “In the old times, if ship X was late, they would speed it up in good times, and in bad times, they would say, ‘let it be delayed.’ As you look deeper into the process, you start eliminating reasons for ships being late in the first place.”
Bloom expounded on the idea.
“Shipowners have traditionally wanted flexibility, but we’ve crossed a point where a process orientation is more attractive to a shipowner than flexibility,” he said. “Also, shippers are now demanding that this mode perform like other modes.” The full report will be offered monthly, and includes SeaIntel’s traditional examination of schedule reliability on a trade lane basis. It also examines carrier booking response times on a country-by-country basis and container delivery on a regional basis.
“We find that out of 31 container carriers, 22 have improved on-time container delivery in June 2012 compared to January 2012,” the report said. “Additionally, these 22 carriers account for 84 percent of all bookings in June, hence clearly indicating that the improvement we have seen in container delivery is caused by improvements across the majority of the industry and not just a few individual carriers.”
The report is released in the middle of the month, looking at data from the preceding month. SeaIntel subscribers get the lane-by-lane, country-by-country data. INTTRA users can compare the container delivery information for their own shipments to schedule reliability on their lanes; conversely, carrier users on INTTRA can track the delivery success of their customers’ shipments against vessel schedule reliability.
The ability to benchmark is but a small part of the aim, Bloom and Jensen said. Performance improvement, based on tangible data, is the ultimate goal. Jensen said the Daily Maersk product launched last fall has spurred the industry to become more focused on meeting advertised container delivery goals.
In October, Maersk began guaranteeing transit times from key ports in Asia through key destination ports in Northern Europe. It may be coincidence, but Jensen pointed out that Mediterranean Shipping Co. – one of Maersk’s biggest global rivals – has seen its on-time reliability increase markedly in the past year, to the point that one of the lowest performers is now very much in the middle of the pack.
“During the first half of 2012, (MSC’s) global on time performance has improved from 60 percent to 73 percent,” the report said. “Most marked is their development in the Asia-to-Mediterranean trade where the improvement was from 19 percent in the beginning of the year to 62 percent in June. On this trade it places MSC’s performance in line with the median in the trade; hence if this is sustainable we might this year be witnessing MSC’s transformation from a carrier known for its low schedule reliability to a stable performer in line with the other main carriers.”
Jensen pointed out that this industry shift to better schedule reliability started in the second half of 2011, but was largely drowned out by a crippling rate war.
“If a dedicated low-cost carrier (MSC) is adopting better reliability, then that’s a clear sign that this is a win-win situation,” he said.
The focus on exacting container delivery can be drawn back even further, to the development of products like APL Logistics’ and Con-way Freight’s OceanGuaranteed or Old Dominion’s Pacific Promise, which set the stage for larger scale endeavors like Daily Maersk.
The data also signals another subtle shift, Bloom asserted.
“Customers care about the delivery of their goods,” he said. “The story about ships and planes is the asset owner’s concern. The shift is to focus on what the customer wants. The customer doesn’t really concern himself with what mode the shipment travelled on. Effectively, you’re seeing carriers in a tough market listen to their customers.”
Jensen added: “It’s hard to deliver that type of product if you don’t have your processes in order – there too many exceptions to manage.”
INTTRA has made it a focus to leverage its vast storehouse of data generated from the 200,000 users on its system, with the company touting that 18 percent of global containerized trade passes through its network. The data provided in the report is aggregated, so no individual carrier or shipper information is divulged. - Eric Johnson